For the Quarter Ending September 2023
In the US market, Polylactic Acid prices witnessed a significant decline during the third quarter of 2023, with several key factors contributing to this trend. Weak demand from downstream industries, sluggish feedstock prices, cheaper imports from Thailand, and stable production costs were among the primary drivers of this decrease. The demand from the downstream packaging industry remained persistently weak, with no new developments reported in either the US or the international market. Consumption rates in overseas markets also remained underwhelming, resulting in a slump in the packaging and specialty plastics industry, a trend echoed by other polymer manufacturers in the global market. Imports from the Thailand market remained ample, although recent ITC trade data indicated a drop in imports from this country. This reduction highlighted the overarching themes of weak consumption rates and limited buying sentiment in the industry. Key manufacturers in the market maintained firm production rates, leading to ample inventory levels. Stable upstream Corn prices contributed to consistent production costs for downstream Polylactic Acid. By the end of the last month of the third quarter in the USA, Polylactic Acid prices continued to decline and were assessed at USD 3108 per MT FOB US Gulf Coast. This pricing trajectory was emblematic of the multifaceted dynamics influencing the Polylactic Acid market in the United States.
In the Asian market, the third quarter of 2023 saw a continued decline in Polylactic Acid prices, with several factors contributing to this downward trend. These included depressed demand, low import prices, weak demand from downstream industries, and limited new queries. In the South Korean market, Polylactic prices experienced a sharp drop, primarily due to sluggish buying sentiment and the influx of cheaper imports from the neighboring Chinese market. The presence of these cost-effective imports significantly impacted the local pricing dynamics. Demand from downstream industries in the Asian market remained largely stable, with minimal changes compared to previous months. The performance of the packaging industry continued to underwhelm, and demand from downstream segments like food packaging and the medical industry showed stagnancy, with limited new queries in the preceding two weeks. Procurement in these sectors was also notably weak. Furthermore, the demand for conventional polymers, as well as biodegradable polymers, remained lackluster in the first half of 2023. Imports from neighboring markets, such as Thailand and the overseas US market, remained ample. However, there was a noticeable decline in imports from both countries, as reported by the latest ITC trade data. This reduction in imports highlighted the persistently weak consumption rates and limited buying sentiment in the Asian Polylactic Acid market. The affordability of cheaper imports from Thailand played a pivotal role in shaping the pricing trajectory during this period. As of the conclusion of August 2023, Polylactic Acid prices were assessed at USD 2980 per MT CFR Busan, reflecting the complex interplay of these market dynamics in the Asian region.
In the European market, the third quarter of 2023 saw a persistent decline in Polylactic Acid prices, influenced by several key factors. Depressed demand from downstream industries, the affordability of imports, a lackluster international market sentiment, sluggish demand resulting from the fragile global economic landscape, and an oversupply in the current market all played a role in this downward trend. The Netherlands continued to witness bearish price trends for Polylactic acid throughout the third quarter. This trend extended to both conventional and biodegradable polymers. The packaging industry struggled to keep up with volumes, and the pricing disparity between contract and spot prices significantly impacted chemical producers in Europe. The continued presence of weak demand and international competition posed challenges to maintaining operating rates in the region. Domestic production in Europe operated at optimum levels, resulting in abundant inventory levels in both the domestic market and at ports. The upstream Corn starch and lactic acid market remained stable during this period. Demand from the downstream packaging industry remained persistently weak, with no significant developments reported in the European market, which had been grappling with a significant decline in demand. The packaging and specialty plastics industry saw sharp reductions in activity, as highlighted by major industry players such as Dow, BASF, and others. Import prices from the Asian market remained relatively lower, as indicated by the latest trade data. This condition resulted in slightly strengthened procurements, although overall demand sentiment in the European region remained predominantly sluggish. As of the conclusion of the last month of the third quarter in the Netherlands, Polylactic Acid prices continued to decline and were assessed at USD 3148 per MT FOB Amsterdam, reflecting the complex interplay of these market dynamics in Europe.
For the Quarter Ending June 2023
In the American subcontinent, the prices spiked persistently in the first half of the Q2 from April to mid-May which later declined in the second half from mid-May to the last week of June. The prices in the first half of Q2 increased owing to the stable to strong procurement activities; further cost pressure from feedstock corn starch is also expected to remain stable and promising demand incoming from the end-use downstream industries like transport, agriculture, textile, packaging, manufacturing, transport. However, in the second half of Q2, the PLA prices declined. In the American markets, because of the cheap imports reaching the American ports from the Asian and European markets. Further, the moderate supply, sufficient inventories, and low to moderate demand coming from downstream have resulted in a price decline. On top of that, the underwhelming performance of the construction industry has further hampered the consumption rates resulting in further price decline of the product. The prices of PLA were assessed at USD 3800/MT USGC on a FOB basis with a 1.9 % monthly increment on 09 Jun 2023.
In the Asia Pacific region, the price of Polylactic Acid (PLA) has been inconsistent throughout Q2, increasing in the first half from April to the second week of May till 12 May and declining thereafter up until the last week of June with the 2 %. The prices increased in the first half of the quarter owing to sudden spikes in consumer demand for PLA, which consequently triggered a bullwhip effect, and in addition, a healthy trading environment with steady demand was observed. In the second half of Q2, the Chinese market witnessed a decline in price because of stable production costs and reduced demand coming from downstream industries. Moreover, the feedstock corn and corn starch prices have also remained stable, culminating in lesser production costs overall, pulling down the prices. Furthermore, coal prices have also reached normal rates after the 2022 upheaval, which further eased the cost support for production. The prices of Polylactic Acid Contract CFR Qingdao China were assessed at USD 2855 per MT Ex-Qingdao on 16 June 2023.
In the European market, the prices of PLA increased in the first half of Q2 of 2023 from the first week of April to 12 Mar while taking on the downtrend from 19 Mar up until the last week of June. The market prices of Polylactic Acid escalated in the German market with costs ranging at USD 3985/ton CFR Hamburg in the first half of Q2 amidst depreciating currency exchange values of Euro against USD and an increase in demand from downstream packaging and textiles. Further, the actual Purchase Manager Index of Germany was seen to be 44, impacting the market sentiments of the product in the region. An increase in demand from the downstream packaging and textiles sector caused this escalation. The prices in the second half declined owing to the stable to lower demand from the downstream packaging, manufacturing, and transport industry, which has cumulatively made the market situation bearish overall. Further, the moderate supply, stable inventories reported by traders, and increasing interest rates due to inflation have resulted in price decline. On top of that, the underwhelming performance of the construction industry has further hampered consumption rates, resulting in further product price decline.
Polylactic Acid (PLA) prices escalated in the North American market during the first quarter of 2023, with costs ranging at USD 3580/ton Contract FOB USGC in February. Downstream packaging product saturation, commoditization of Polylactic Acid, emerging customer channels, and growing price sensitivity have changed the marketing prices of PLA manufacturing companies in the packaging industry. Along with this, an increase in operating costs, logistics, and utilities based on Polylactic Acid elevated in the market. The procurement of Polylactic Acid increased in the North American market with lowering inventories rate of the product with increasing consumption with the traders.
The market value of Polylactic Acid elevated in the Asian market during the first two months of Q1, 2023, with prices ranging at USD 2730/ton Contract CFR Qingdao. An enormous quantity of energy is needed to produce PLA, which raises the price of the completed good. The market value of maize starch was under pressure because of the increase in energy costs. The effectiveness and expense of the PLA production processes have an impact on the price of the materials used in packaging farther down the supply chain. However, this trend reversed during the last month of the quarter due to decreasing demand from the downstream market, which elevated the inventory level of Polylactic Acid with the traders and suppliers.
During the first quarter of 2023, the prices of Polylactic Acid depleted during January while escalating during the remaining two months of the quarter, with prices ranging at USD 3905/ton FD Immingham in March. The exporting nations' production costs rose to pressurize the market value of the product. A decrease in the supply of the product in the region due to a slight supply chain disruption caused a scarcity of the product among the traders. Increasing competition between the suppliers of PLA in the region impacted the prices of Specialty Chemicals. With a rise in consumption, the inventory level of the product decreased with the merchants, and stocks of feedstock Corn Starch were also observed to decrease. The freight charges were also increasing from North Europe to East Asian countries.